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Mortgage Tips by Jerry Sims

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Blog by John Jennings | July 25th, 2008

Home Equity Line of Credit

The home equity mortgage is secured with your property and provides you with an easy and affordable revolving Line of Credit that allows you to use the equity in your home to borrow money. With this type of Line of Credit, you can have access to up to 80% (or more) of the appraised value or purchase price of your home (whichever is lower), less any prior outstanding mortgage charges. Where you have both a fixed rate mortgage and a LOC, some lenders offer a feature where as your fixed rate mortgage balance decreases, your available credit on your LOC increases. You can use your available credit to:
  • Renovate
  • Take a vacation
  • Purchase a vehicle or boat
  • Purchase a recreational or rental property
  • Take advantage of investment opportunities
The increasing available credit feature is a great benefit to those of you who wish to use the funds for investment and thereby take advantage of ‘The Smith Manoeuvre’ which is a system which allows you to make your mortgage tax deductible. (More on this in upcoming blogs….) Another benefit to having the Home Equity LOC is you can pay your mortgage at your own pace since the minimum payment is interest only and there is no limit as to how much you pay toward the principal each month.  It also costs you nothing if you don’t use it and stays available for you to use whenever you need it next.

One more feature is that you can hedge your bets on the Fixed vs. Variable rate debate.  By splitting your mortgage into two and having both a fixed rate portion and a Line of Credit which floats with Prime rate, you are covering all the bases.

Jerry Sims is a mortgage broker with Ambro & Associates Mortgage Consultants Ltd. with over 20 years of lending, banking and financial planning experience. A highly satisfied and loyal client base can attest to Jerry's knowledgeable, creative and caring service that rises above and beyond expectations. Jerry has worked at several financial institutions in the capacity of loans officer, branch manager and credit manager.

Please feel free to ask John for an endorsement if you would like to know more about my services.

Jerry Sims Mortgage BrokerJerry Sims, AMP
Mortgage Broker
Ambro & Associates Mortgage Consultants Ltd.
c 604.808.3420